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Trade Promotion Authority: Make the Case

Posted By Derek Scissors, Ph.D. On June 5, 2013 @ 2:30 pm In Economics | Comments Disabled

Newscom [1]

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Trade promotion authority (TPA) does several positive things. For one, it gives the President a window where Congress agrees to an up-or-down vote on trade agreements, without the possibility of amendments. It therefore raises the chances of a vote in favor of a deal and is generally welcomed by free traders. It’s not clear, however, that TPA should be moving forward right now.

TPA wisely institutionalizes the need for the President to keep Congress informed during the trade negotiation process. The binding negotiating objectives Congress provides to the President in TPA can seek to promote competition or to limit it, where more competition should certainly be the goal for international services negotiations and imminent EU–U.S. talks. If, for some reason, now is the time that the best, competition-promoting TPA can be written and passed, so be it. [2]

Such a reason is not apparent. The first agreement that would come up for a vote under TPA is almost surely the Trans–Pacific Partnership (TPP). In the past, TPA has been sought near the start of negotiations, so Congress could provide a policy benchmark and instill political confidence. The Obama Administration has still not made a formal request for TPA, after negotiating the TPP throughout the President’s first term. Congressional guidance was not sought and Congress is not obligated to support anything.

While it would be foolish to oppose a sound TPP on those grounds, we have no indication a sound TPP is forthcoming. The Administration has imposed such stringent limits on information concerning the talks that it is difficult for most interested observers to say what is settled, what is nearly settled, and what is quite unsettled.

One implication is unclear timing. When will the TPP be ready for a vote? The answers range from late this year to early 2015. The TPP includes 12 members of very different sizes and stages of development. It must address difficult issues involving intellectual property and state-owned enterprises. [3] From what little information is available, it will be a serious challenge to conclude discussion of these issues this year.

And 2014 is an election year, when trade votes are traditionally put off to protect incumbents against protectionist challengers. Further, the TPP will likely be more sensitive for the party that controls the Senate, as Democrats’ union supporters may be unhappy at the thought of expanded economic ties with Asian and Latin American partners.

Trade promotion authority is desirable because it heralds something positive. If TPA can improve the TPP even this late in the game, that case should be made explicitly and in detail. Otherwise, there is little reason to see the TPP as imminent and there is not especially much reason to see it as necessarily wonderful—too many core issues at least appear to be unresolved.

That makes it hard to be particularly enthusiastic about TPA right now, either.


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URL to article: http://blog.heritage.org/2013/06/05/trade-promotion-authority-make-the-case/

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[1] Image: http://blog.heritage.org/wp-content/uploads/cargo_130307.jpg

[2] so be it.: http://www.heritage.org/research/reports/2013/04/advancing-trade-freedom-key-objective-of-trade-promotion-authority-renewal

[3] intellectual property and state-owned enterprises.: http://www.heritage.org/research/reports/2013/03/what-a-good-trans-pacific-partnership-looks-like

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